Forbes Halai Touryalai writes: For what it’s worth, Moody’s thinks Jefferies Group‘s $78 million
in pay for two of its top executives is a bad idea. A week after the investment bank announced
that it was awarding CEO Richard Handler some $58 million over three years the credit
rating agency is calling the compensation package a “credit negative for
bondholders–in other words the payout could hurt the firm’s credit rating.
Last week the firm said it would award a combined $78
million to two executives including chairman of the executive board, Brian
Friedman. Wall Street was buzzing about the compensation amounts as large
payouts like this one have been scrutinized since the financial crisis.
Much of the pain on Wall Street (if you can find any) has
been placed on rank and file employees. Some 26,352 employees were let go in
the financial sector in the first half of 2012 while the giant pay packages for executives mostly
remain the same.
Jefferies fared relatively well during the financial crisis
and its aftermath, however. Even Moody’s points out the firm’s strengths like
its increasing capital base, diversified revenues and its management team that’s
been able to avoid the “large market, credit and litigation losses that have
plagued–and sometimes crippled–its larger competitors.” Historically,
management’s ability to manage risk has kept Jefferies bondholders in the
clear, but….
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